My monthly expenses and income

[BMEPhDinCO]

Sounds like it's pretty thought out...if you are bringing home close to $3k and you are spending close to $2,700, you should have $300 extra a month - for now I'd put all that into the EF AFTER paying the computer loan, since it's only $300 left - when the car is paid off, you should also have a 1 mo EF ready - that'll put you in a good position!

For the iPhone, I pay $78 a month with a GA number - see if your new job has a discount available, but even if not, I never paid more than $85 for it - with 200 msg a month.... where's that extra $20 for you? If it's a higher msg plan, get a free text app and cut that back.

I think that it's just time for you for the most part - in 1 year you should be in a better position, just don't add to your debt!

[Jb1210a]

That's fantastic advice. I really think the difference is the text plan when it comes down to it. I used to speak with my ex ALL the time so the unlimited messages was perfect, I do have gtalk on my phone, but it's so I can have a local GA number to enter my community through the gate.

[Frugal]

Your rent seems pretty reasonable to me, but then again, rents always depend upon area. We don't live in a huge city, but we were paying MUCH more for an apartment each month, and now also for a mortgage on our house now that we are homeowners.

[Jb1210a]

I'm from New England where a 2 bedroom cost us 1200, this is a VERY nice change, so 714 is really good as far as I'm concerned. If my brother moves in, I assume I'll get at the very least 400 more per month, which I assume will be best used towards paying my car and computer off. Agreed?

[Petunia 100]

I'm from New England where a 2 bedroom cost us 1200, this is a VERY nice change, so 714 is really good as far as I'm concerned. If my brother moves in, I assume I'll get at the very least 400 more per month, which I assume will be best used towards paying my car and computer off. Agreed?

In my opinion, having a savings account is a higher priority than speeding up debt repayments. You have a minor child relying on you, a new job, and no savings. One small unexpected expense could mean you won't be able to pay your bills on time.

Best of luck to you and your daughter in your new place.

[Jb1210a]

I was always under the impression that it was bad practice to have a savings account if your interest was less than the APR you'd be paying on a CC and a Car. I adjusted my budget to include an EF, but I wasn't aware it was more important.

[BuckyBadger]

I was always under the impression that it was bad practice to have a savings account if your interest was less than the APR you'd be paying on a CC and a Car. I adjusted my budget to include an EF, but I wasn't aware it was more important.

That math is true, but it presupposes the fact that you already have an EF for, well, emergencies!

The point is that once you have your EF funded, you then stop saving MORE until your debts are paid off. What you don't want to happen is have no debt and then no cash -- because if something happens and suddenly you need a few thousand dollars to replace a car or pay for a medical bill or something, you go right back into debt to do so.

So fund an EF, then pay off your debt, then start saving for other things.

[Jb1210a]

I read in a few places where having an easily available 500 was good for most emergency situations, but to have a real EF, that it should be 6 months of expenses? Is this correct?

[BuckyBadger]

I read in a few places where having an easily available 500 was good for most emergency situations, but to have a real EF, that it should be 6 months of expenses? Is this correct?

I believe that Dave Ramsey suggests $1,000 as a first goal. The long term goal is usually stated as 3 to 6 months of basic living expenses, so what you just need to really survive (so not entertainment, eating out, any other perks). Some people want 3 months, others are happier with 6 months, some people have like 12 months to make themselves comfortable.

It depends on a few tings: are you the only wage earner, how stable is your job, do you have other safety nets... For example, we have only a 3 month EF in case because we both work and make in the same ballpark, both our jobs are as secure as one can reasonably assume jobs to be, and we have other investments that we could tap if we really needed something after 3 months.

So that's what you should think about when deciding how high to set your EF.

[Jb1210a]

I am single and very healthy so I think a health risk is less likely to knock me out. I did just start a brand new job so if there's a "probationary period" I'd need to be on top of my game. I think that at my age and job security that a 3 month EF would be more than acceptable. However, there's no sense in making such a huge goal without a few stepping stones so I think 500 would be a good start then I'd gradually work on that as the days pass.

[disneysteve]

I am single and very healthy so I think a health risk is less likely to knock me out.

That's a faulty assumption. As a doctor, I can list many common things that can sideline a young healthy person for up to a couple of months if not more - appendix, gallbladder, sports injury, auto accident, etc. And there are many less common health issues too like certain cancers that are more common in young people.

[BuckyBadger]

I am single and very healthy so I think a health risk is less likely to knock me out. I did just start a brand new job so if there's a "probationary period" I'd need to be on top of my game. I think that at my age and job security that a 3 month EF would be more than acceptable. However, there's no sense in making such a huge goal without a few stepping stones so I think 500 would be a good start then I'd gradually work on that as the days pass.

$500 is certainly better than nothing! And I think a goal of 3 months is reasonable. Once you get there you can always change your mind if you decide you want more.

[20sfinances]

There is a lot here, but I would suggest shopping around. You mentioned that you thought the loyalty would do you good, but it really doesn't work that way with insurance companies. I thought the same thing until I shopped around and found I could save $30 per month on car insurance.

[Petunia 100]

I was always under the impression that it was bad practice to have a savings account if your interest was less than the APR you'd be paying on a CC and a Car. I adjusted my budget to include an EF, but I wasn't aware it was more important.

It is true that you are paying more in interest than you will earn in a savings account. The point of a savings account is not to earn interest but to have a ready source of cash.

If tomorrow your car will not run at all without a repair, how will you pay for that? Will you whip out a credit card? Will you skip your daycare payment? Your rent? Where will the money come from? You have no savings to rely on. The problem with relying on credit is that your available credit can be reduced to zero at any moment. Plenty of people have experienced this very thing.

What if you slip and fall and break your elbow, miss a few weeks of work and rack up some out of pocket medical bills? What if you need physical therapy once the cast comes off? How will you pay for your necessities plus the extra medical expenses?

There are an infinite number of "what ifs". Protect yourself and your family, get some extra cash in the bank.

[Jb1210a]

I agreed with you, no need to draw out the reasons, I'm able to understand why a savings or EF account is important.